The big three U.S. carriers are fighting back.
The aviation giants are appealing to the U.S. government, claiming that Emirates, Qatar and Etihad are competing unfairly. They hope the government will limit the new carriers’ access to the U.S. market.
Delta, United and American have to defend. The Mid-East carriers are going after long-haul travelers, especially lucrative business travelers willing to pay for a business class or first class ticket. This is the most important segment of the global air transport industry.
The new carriers are having considerable success. Dubai, home of Emirates, is now the world’s largest airport in the world in terms of international travel. The carriers have built huge fleets in just a few years, with more planes on order.
The problem is that stopping the new carriers won’t be easy, because they provide great service at competitive prices. The planes are new and snazzy. On Emirates you can take a take shower while crossing the Atlantic, and then relax at the in-flight bar. You can’t do this on United, American or Delta.
The U.S. carriers understand that they simply can’t compete. They just can’t duplicate the experience at a similar price.
This is a problem.
The reason that the new carries are so successful could be that they are receiving government subsidies. This lets the airlines fly routes that are otherwise unsustainable, and provide a level of service that exceeds the price. I suspect this is true; I have trouble believing that Emirates can be profitable flying dozens of gas-guzzling A380s all over the world.
But it doesn’t really matter. The U.S. airlines can’t win on quality.
Which means the best response is to use government regulation to block the competitors. If successful, regulations can limit access to the U.S. market. This reduces the threat.
The U.S. carriers are in the same boat. This is why the CEOs are working together to make the case that regulations are important. All three were in Chicago this week, highlighting the need for limits on the new entrants.
They are smart to work together and smart to pursue this defensive strategy.
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